Car Retail Sales Surge 33% In October But Inventory Stays At 75-80 Days

Car retail sales rose by nearly a third in October 2024 but that did precious little to address the inventory situation in the world’s third largest automotive market.

Retail sales—measured as vehicle registrations on the government’s VAHAN website—rose 32.38% over the year-ago period to 4,83,159 units, according to data released by industry body Federation of Automobile Dealers Association on Wednesday. The inventory has reduced by just five days to 75-80 days as on Oct. 31 from 80-85 days as on Sept. 30. About 7.5 lakh cars worth Rs 75,000 crore are still languishing at stockyards.

“Despite strong sales, PV OEMs continue to heavily stock dealers, resulting in inventory levels decreasing by only five days, with overall inventory still at a high of 75-80 days,” FADA President CS Vigneshwar said in a media statement. “This may thus lead the season of substantial discounts to continue until the end of the calendar year.”

The dichotomy, in a way, underscores the structural issues afflicting India’s car industry. The sub-Rs 10 lakh segment remains under pressure, despite discounts, and newer SUVs dominate sales. An overload of features and regulations is impacting affordability.

Elsewhere, there was growth everywhere.

• Two-wheeler sales up 36.34% YoY at 20,65,095 units

• ⁠Three-wheeler sales up 11.45% YoY at 1,22,846 units

• ⁠Four-wheeler sales up 32.38% YoY at 4,83,159 units

• Truck/Bus sales up 6.37% YoY at 97,411 units

“October 2024 witnessed the convergence of two major festivals, Navratri and Diwali. The festive period traditionally accounts for 30–35% of total annual auto sales,” Vigneshwar said. “With dealers entering this crucial period fully committed and carrying all-time high inventory levels, the month did not disappoint.”

A revival in rural demand, supported by an increase in minimum support price for the rabi, or winter, crop, aided two-wheeler and four-wheeler sales. While festive demand aided commercial vehicles, challenges relating to sluggish construction and price hikes affected overall sales growth.

To be sure, the festive outperformance may just be a flash in the pan.

Volumes may just come off a cliff, Ravi Bhatia of Jato Dynamics indicated. The demand just may not sustain as the calendar year draws to a close. 

“October’s relief rally, while impressive, faces immediate headwinds from the VIN year change and persistent entry-level segment challenges,” he said. “The industry needs to address these structural issues for sustainable growth.”

VIN is short for Vehicle Identification Number, a unique 17-character code that identifies a vehicle. It contains information on when and where a vehicle was manufactured, and by whom. It includes details on the engine type, original features and specifications.

Bhatia believes that carmakers will persist with discounts to prop sales in the second half of Fiscal 2025, amid a key overhang that is a sticky inventory situation.

Still, the upcoming wedding season—4.8 million weddings are expected in November and December—is likely to fuel demand for passenger cars and motorcycles. A steady crop yield can boost rural sentiment further, aiding higher vehicle sales.

“While the industry is optimistic about near-term growth driven by the wedding season and favourable market conditions, dealers are mindful of potential challenges that could affect sales momentum as the year concludes,” FADA’s Vigneshwar said. “The mixed sentiments highlight the need for strategic planning and cautious optimism as the Indian auto sector navigates the remaining months of the year.”